The most popular New Year’s resolutions are to lose weight and exercise more. Sorry, but I can’t help you with either one of those. They have been on my list for years and I haven’t been successful yet. The 3rd or 4th resolutions on most lists are to either improve savings or decrease expenses, which really means getting your financial house in order. There are three steps to accomplishing this, but most people don’t accomplish their goal because they don’t want to do the first step.
Step One – Figure out where you stand today.
Step Two – Figure out where you want to be in the future.
Step Three – Design a path to get there.
Step One
As I said, the first step is the hardest. It takes two documents (or paper) and two columns. In the first document, list your assets and liabilities, or what you have and what you owe. On the left
side, list all of your assets including:
- Bank accounts
- Investment accounts
- Businesses
- Value of your house
- Vehicle (if you don’t lease)
- Anything else you own of value
On the right side, list what you owe including:
- Mortgages
- Home equity lines of credit
- Credit care debt
- Student loan debt
- Anything else that you owe
The second document is your cash flow page (what you make and what you spend). On the left side, list where you get your income from including:
- Wages
- Dividends and interest
- Investment income
On the right side, list all of your regular bills including:
- Mortgages
- Credit Cards
- Utilities
- Cell phones
- Insurance
- Living expenses
- Anything else you spend money on
Going through your check register is a good way to do this. Finally, add up all four columns. Hopefully, the left columns are greater than the right ones, but that’s not always the case. If the left columns are bigger, don’t worry about it, it is fixable.
Step Two
The second step is the fun one. This is where you get to dream about the future that you want. I am talking long-term future, not next week or even next year. Write them all down. This is sometimes tough to do as many of us are so busy worrying about tomorrow. Set aside some quiet time and be sure to include your spouse or significant other (if you have one). Remember to dream big and don’t take the attitude that you will never be able to accomplish it. You can accomplish anything if you want it bad enough.
Step Three
The final step is to design a path to get from where you are to where you want to go. A financial advisor can be very helpful in assisting with this. Future columns will also give some helpful tips. If you need help, don’t hesitate to call someone. Above all, don’t get frustrated. The process will likely start out slowly and pick up momentum over time, and yes, there will be bumps in the road but you will get past them if you stay true to your goals.
Good luck and may 2019 be the year that you achieve your New Year’s resolution.